(Adds GFI comment, and more details on tax sharing agreements in new paragraphs 7-9)
By Stella Dawson
WASHINGTON, Aug 21 (Thomson Reuters Foundation) - China has agreed to join the international effort by the Group of 20 leading economies to combat tax evasion by signing an agreement to share tax records, the OECD said Wednsday.
China's decision means that all G20 countries now have agreed to cooperate on tax avoidance, a priority set by global leaders to address the causes of the 2007-2009 financial crisis and to help combat corruption.
The Organisation for Economic Cooperation and Development (OECD), the global economic policy forum, said that Chinese Tax Commissioner Wang Jun will sign the convention on Mutual Administrative Assistance in Tax Matters in Paris next week.
China recently has ramped up its efforts to crack down on corruption in the world's second-largest economy, arresting public officials on bribery charges, banning their elaborate expense-account dinners and investigating corporate activities.
Tax avoidance is frequently linked to corruption. Illicit funds, earned from crime, corruption and tax evasion, often are moved out a country via tax havens and by using shell companies. Sharing tax information can be an important tool in helping to track these funds.
Global Financial Integrity, a financial watchdog group, has estimated that more money flows out of China from illicit financial activity than any other developing country. Its latest report estimates the losses between 2000 and 2011 at $3.79 trillion.
"We are glad to see China's willingness to consider cooperating on tax matters internationally," GFI spokesman Clark Gascoigne said.
However, it needs to go further, he said. Far more effective would be for China to start automatically exchanging tax information -- a move endorsed by G20 members at its July meeting -- not merely agreeing on the mechanism for sharing tax data upon request, he said.
In another small step on sharing tax data, the U.S. Treasury earlier this month said that China has decided to negotiate an agreement with the United States to share information about U.S. taxpayers' financial holdings.
China has yet to join the OECD's Anti-Bribery Convention, the international standard for how to combat graft of public officials in foreign business transactions. Drago Kos, the OECD's incoming anti-graft chief, said in a Thomson Reuters Foundation interview that getting the biggest developing economies on board will be a priority for his tenure.